RIAA’s Wasteful Spending

The RIAA’s battle versus piracy has been doomed from the start. With high priced lawyers coming down hard on downloaders – often the very fans the RIAA should be wooing – it isn’t hard to see why they are so often vilified.

Granted, what file traders are doing is unequivocally harmful to those whose livelihoods are supported by the music industry. This is not in dispute. It’s particularly bad for a lot of unknown behind-the-scenes folks who make a very average living – songwriters who don’t perform, studio techs, artist crew, staff at labels and management companies, etc. These are people who do the dirty work and get the shaft.

HOWEVER, things happen and you have to move forward. Unfortunately, the RIAA decided to take a more litigious route and it has been an utter failure.

The RIAA paid Holmes Roberts & Owen $9,364,901 in 2008, Jenner & Block more than $7,000,000, and Cravath Swain & Moore $1.25 million, to pursue its “copyright infringement” claims, in order to recover a mere $391,000. [ps there were many other law firms feeding at the trough too; these were just the ones listed among the top 5 independent contractors.]

Embarrassing.

If the average settlement were $3,900, that would mean 100 settlements for the entire year.

As bad as it was, I guess it was better than the numbers for 2007, in which more than $21 million was spent on legal fees, and $3.5 million on “investigative operations” … presumably MediaSentry. And the amount recovered was $515,929.

And 2006 was similar: they spent more than $19,000,000 in legal fees and more than $3,600,000 in “investigative operations” expenses to recover $455,000.

So all in all, for a 3 year period, they spent around $64,000,000 in legal and investigative expenses to recover around $1,361,000.

Their argument would be that they are simply policing the theft of their property. In strictest legal terms, they are right. It’s no different than a software company cracking down on people pirating Photoshop. But, there was a way around all this.

Had the RIAA simply seen the writing on the wall and made the much more wise decision to offer alternatives – lower prices on downloads to start but more creative promotional and merchandising options – they very likely could have minimized the damage if not reaped real rewards from being ahead of the curve.

Not only did they destroy any tiny amount of goodwill they could have had while driving their own businesses into the ground, they thwarted innovation only delaying the inevitable. As usual, the only one’s who got rich were the lawyers.